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HMRC internal manual

Business Income Manual

Specific deductions: advertising: sponsorship: entertaining and benefits in kind

In addition to the advertising, the sponsor may receive other benefits such as tickets to the event or access to hospitality boxes.

For example, a trader may enter a corporate sponsorship package with a theatre. The package includes advertising in the programme and in the foyer. In addition the package includes tickets and meals.

Although the theatre may emphasise the opportunities for business entertaining in its advertisements for sponsorship, the trader may have no use for these tickets or may use the tickets to entertain staff or guests. It is therefore important to establish the facts of the particular case before deciding whether a deduction for the expenditure is allowable.

The type of evidence to look for would include any business plan relating to the sponsorship, minutes of directors meetings and evidence as to how the facilities were actually used.


Where the sponsorship costs include an element of hospitality, this is disallowable under the rules at BIM45055.

Where a single sum is paid for a package that includes both advertising and hospitality, then the sum should be apportioned (see BIM37007).

You should look to see if the sponsored party also offers elements of the package separately as this will provide evidence as to the value of the different parts of the package.

Sponsorship may result in a taxable benefit for employees, including directors.

For example, the controlling director of a company has an existing personal interest in motor racing and is a member of a racing team. The director decides that the company will sponsor that team. The company pays bills for maintaining the team’s cars. You should consider whether the expenditure gives rise to benefits taxable on the director as part of their remuneration. See EIM20001 onwards for further guidance on employment-related benefits.

Where corporate hospitality is provided to an employee or director by reason of their employment it may represent an employment-related benefit (EIM21729). If expenditure is incurred as part of the remuneration package then it should be considered as part of the cost of employing the person concerned and a deduction allowed accordingly.